U-Haul's $41.4M Settlement May Encourage Small Litigants

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By Anandashankar Mazumdar

Oct. 19 — U-Haul International Inc.'s well-publicized agreement to settle a trademark infringement case for some $41.4 million might encourage small companies who are accusing larger competitors of infringement.

The settlement comes two years after a $60.7 million infringement award by a jury. The winner in the case, Pods Enterprises Inc., is calling it “one of the largest trademark victories on record.”

For small companies, the payment amount is significant when seeking damages for “corrective advertising,” which refers to costs incurred by a trademark owner to correct consumer confusion when their trademark is infringed by a bigger, more well-known competitor — like U-Haul, in this case.

U-Haul did not respond to a request for comment.

Publicity Could Boost Smaller Cos

It seems unusual that the settlement amount was made public, according to trademark practitioner Jeffrey L. Van Hoosear of Knobbe, Martens, Olson & Bear LLP, Irvine, Calif.

Litigants agreeing to pay a settlement customarily insist on a confidentiality clause, he said. Apparently, that didn't happen here; Pods sent out a statement Oct. 14 announcing the deal.

Trademark litigator Alan S. Cooper of Westerman Hattori Daniels & Adrian LLP, Washington, had a similar view.

The company paying out a settlement doesn't “want to open the door for other people to go after them and seek similar payments,” Cooper told Bloomberg BNA.

But now, trademark plaintiffs can use knowledge about the U-Haul settlement as a weapon, Van Hoosear said. “I think this is a great case to show against other infringers” when representing a trademark owner in litigation.

All that is compounded by the size of the settlement, which comes two years after a jury trial that awarded Pods $60.7 million (50 PTD, 3/16/15).

Cooper said the case is particularly interesting to smaller companies fighting trademark battles against larger competitors, because the bulk of the damages awarded here were for corrective advertising to cover Pods' expenses in countering U-Haul's infringing use of its “Pods” trademarks. The result might give Davids some hope that taking on Goliaths in court could be worthwhile, he said.

Source Material:

Pods Enters. LLC v. U-Haul Int'l Inc.

Complaint: July 3, 2012

Jury Verdict: Sept. 25, 2014

Cooper was on the litigation team that lost the first big corrective advertising case in 1976, which required Goodyear Tire & Rubber Co. to pay $2.8 million dollars for infringing the “Bigfoot” trademark. Big O Tire Dealers, Inc. v. Goodyear Tire & Rubber Co., 408 F. Supp. 1219, 189 U.S.P.Q. 17 (D. Colo. 1976); aff'd 561 F.2d 1365, 195 U.S.P.Q. 417 (10th Cir. 1977).

Pods Goes After U-Haul

Pods Enterprises, based in Phoenix, offers storage and transportation services, and its “Pods: Portable on Demand Storage” trademark adorns the portable crates that customers can fill up on location.

It sued national moving giant U-Haul in 2012 for using the term “Pods” to promote its competing U-Box service.

It is unclear if the large 2014 jury award has had an impact. Since 2009, cases involving corrective advertising claims have remained relatively steady, hovering around an average of 190 cases, according to an analysis of Bloomberg Law documents. In 2014, there were 194 such cases and, in 2015, there were 197.

Stroock & Stroock & Lavan LLP, King & Spalding LLP and Rocke, McLean & Sbar P.A. represented Pods Enterprises. Beus Gilbert PLLC, Kilpatrick Townsend & Stockton LLP, Wilmer Cutler Pickering Hale & Dorr LLP and Johnson & Cassidy P.A. represented U-Haul.

To contact the reporter on this story: Anandashankar Mazumdar in Washington at amazumdar@bna.com

To contact the editor responsible for this story: Mike Wilczek at mwilczek@bna.com

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